Relationships and engagement are critical to success. They will also very likely change throughout your neighbourhood battery journey, and as different stages of implementation are reached.
Partners
Your neighbourhood battery project will involve partners. In addition to your project team, you may bring a project manager and other project staff on board once you have established your project. This core team will need to have expertise in energy systems, in order to understand battery models, specifications and integration and to communicate effectively with your DNSP (see below). For community battery projects (and ideally for neighbourhood batteries generally), you will also need core expertise in community engagement, in order to develop channels and relationships with your community, and to assess and understand the social benefits and services of your battery.
Beyond your project team, partners may include energy businesses (see below), your local council, local businesses or organisations and research groups. Partnership requires investment, but also allows the pooling of resources, knowledge, and capacity. Partnership also helps with governance and oversight to your project. In a context in which communities may be distrustful of the energy sector, partnerships, particularly involving public interest bodies (elected bodies, not-for-profit organisations or publicly-funded research organisations), may be critical to social acceptance.
Most neighbourhood battery projects will require partnership or contractual relationships with energy businesses. These include network businesses, who are responsible for connecting the battery to the distribution network, and retailers or aggregators, who can participate in energy markets and facilitate customer retail tariffs.
You need to establish agreements among partners at an early stage to define roles in the project, financial obligations, and returns, and how you will communicate and make decisions. There may also still be some gaps in capability or capacity that might affect the project.
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What is the role of energy retailers?
Retailers buy energy from the spot market and sell that energy on to customers. They act as a hedge, shielding businesses and householders from the volatile prices of the National Electricity Market (NEM).
Some retailers also own generation infrastructure (power plants or solar/wind farms) and are referred to as gentailers. The largest energy retail businesses in Australia are gentailers and the top 3 (AGL, Origin Energy, and EnergyAustralia) supply more than a third of the retail electricity in the NEM. AGL and Origin are Australian-based, publicly listed companies. EnergyAustralia is a subsidiary of Hong Kong-based China Light and Power (CLP Group).
A number of small, locally-based retailers have been established over recent years, many with an emphasis on renewable energy. Unlike gentailers, they are exposed to fluctuations in wholesale electricity prices, and struggle to compete with the large gentailers. Several such companies have gone out of business in the last few years or have been acquired by larger gentailers.
Small-scale, customer energy resources (CERs) such as rooftop solar panels cannot participate in electricity markets because they are too small to be eligible to supply power under the Australian National Electricity Rules (NER). This goes for neighbourhood batteries as well. However, some retailers have adopted a business model aggregating small-scale energy generation such as from residential solar panels and wind turbines. These ‘aggregators’ work with customers who produce this small-scale generation to buy and sell electricity in the electricity market.
Under the current rules, retailers can own neighbourhood batteries, adding them to their generation portfolio, and with them, participate in electricity markets. Neighbourhood battery projects can partner with retailers, including aggregators, to access market participation. Retailers also provide the legal and administrative means to interact with people as customers, through tariffs and plans/subscriptions.
Retailers have so far been working with neighbourhood battery projects to assist in their integration into the energy market system. However, it seems likely in future that individual neighbourhood batteries will be too small to be of much interest to retailers (or DNSPs for that matter). Various community groups and organisations are considering setting up networks of batteries (across a locality or region), to benefit from economies of scale and to facilitate market participation. For a community energy group, a good option may be to join one of these networks.
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What role can Local Government play?
There are a number of different roles that local government can play for neighbourhood batteries, including:
• Buying and owning the battery
• Managing a battery financed by another organisation
• Leasing council land as a site for the battery
• Providing assistance with planning and other approvals
• Funding a community group or organisation to establish a neighbourhood battery project
• Auspicing a community group (e.g. through a grant application process)
• Assisting with community engagement through existing engagement
• Playing a part in the ongoing governance of the battery.
There are, as yet, no examples of council-owned or managed neighbourhood batteries in Australia (see trials above). Neighbourhood batteries certainly align with local councils’ policy goals around decarbonisation and energy affordability. In some parts of Australia, community members trust councils more than energy businesses and see them as potential ‘honest brokers’ in facilitating neighbourhood battery projects. Local governments vary greatly in their resources and appetite for participating in renewable energy projects. As such, it is recommended to research your local council and check if they have climate policies or renewable energy targets in place that could align with and help leverage your project and partnership with them.
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What is the role of a DNSP?
Distribution Network Service Providers build, maintain, and operate our distribution networks. Distribution networks transport electricity between the high voltage (transmission) network and the lower voltage part of the network, where our houses are. DNSPs are allowed to own neighbourhood scale batteries but cannot use them to participate in retail electricity markets. If they choose to participate in energy markets, they must obtain a waiver and form a relationship with a retailer.
There is only one DNSP for each part of the network i.e. they are a regulated monopoly. DNSPs are an essential partner in front-of-the meter neighbourhood battery projects because the battery, once connected, will be part of the network that they are responsible for. The project will need to negotiate a network connection agreement with the local DNSP. Note that the DNSP will regard the battery as a generator and a load/user of energy and both capacities need to be taken into account. The connection agreement will involve scheduling a complex connection process, which needs to be initiated at least 6 months before the launch of the battery.
As part of this, the DNSP will charge the battery (owner/manager) a tariff to make use of the distribution network. This network tariff will be a crucial factor in the feasibility of the project. In existing arrangements, batteries have to pay to use the network for charging and households have to pay to use the network for the energy that is discharged from the battery to their houses. This double charging makes most neighbourhood battery projects uneconomic. Network businesses are currently developing new tariffs for neighbourhood batteries. These new tariffs, in addition to charging the battery for use of the network, can also pay batteries for the network services they can provide (see network tariffs section).
In future, DNSPs may also develop other ways of costing and paying for network services that neighbourhood batteries provide. This will require negotiation in relation to the goals and benefits the battery is designed to serve, and how these can be balanced with the requirements of the network.
Even in the absence of agreements around network services, projects need to access network data in order to understand energy generation and demand, as well as mapping out constraints and the services a battery could safely provide in the locality to select a suitable site in the network (which may also involve DNSP owned land) and for feasibility studies. While this data may be available in future through online portals (see Data section), at the moment it relies on the goodwill of the DNSP.
Contributors
There may be people or organisations that are contributors to your neighbourhood battery project, without having a full partnership role. For example, if you are not formally partnering with a network business, you will still need to establish a relationship with your DNSP for the network connection. This relationship is critical and is therefore one of the early ones to set up and to maintain throughout.
Other examples of possible contributors:
- owners of the land where you are seeking to install the battery
- consultants brought in on an ad hoc basis to provide expertise, particularly:
- an insurance adviser to understand risks and broker insurance
- a legal advisory to assist with contracts
- additional energy system expertise, e.g. for power system modelling
- economic expertise to assist with economic feasibility analysis
- engagement design and facilitation
- researchers who may be involved in studying the project and providing analysis and advice
- companies who develop software will also be an essential part of the project, as an interface will be needed to operate the battery, and its design will be influenced by, and will in turn influence, the battery management system
Similar to partnerships, it is important to get clarity on what roles contributors will play, how you will communicate and make decisions, financial arrangements and conflict resolution mechanisms.
Community
Relationships with community are critical to the success of battery projects. You need the support of the whole community, not just community members who actively participate but everyone who is potentially affected by the battery. Your business model will be based on providing value to the community and responding to their needs and aspirations. Public values and expectations of the energy system change over time and are different across the community, so it’s important not to assume you already know what these values and aspirations are. You need to ask about them.
There will be particular points in the project where you need to go out and engage with the community. This depends on your project and goals.
| Project Stage | Community engagement |
|---|---|
| Setting up your project | Community members as partners (collaborate, deliberate) |
| Designing your model | Community members as co-designers (collaborate, involve, deliberate) |
| Testing your model | Community members in the locality (consult, involve) |
| Implementing your model | Community members as participants (involve, empower) |
Community members as partners
For businesses or organisations, having community members as partners can provide an essential conduit to the community, and can help to build the social acceptance of the project. Diversity is important if these community partners are to ‘represent’ the community. A great way to build trust is to invite a critic into your tent. They will flag concerns early and raise the bar on the social responsibility of the project.
Community members as co-designers of the battery
If a battery is intended to serve a neighbourhood (rather than just serving to augment the network), a process of co-design with the local community could be a useful early step in your project. Community co-design can help in selecting and configuring a business model and a battery that meets the community’s needs and aspirations and addresses their concerns and requirements. It will also spread the word, raise interest, and potentially build support for the project. A co-design process, if well run, can also help to build a sense of community in the neighbourhood, as people come together to talk about what they want and don’t want and make decisions together. It can also enable the sharing of information and ideas about other energy technologies and efficiency options.
Community members near the battery site
The battery will impact everyone in the neighbourhood, regardless of whether they use the battery. These impacts include amenity and noise. Those closer to the battery will be more affected. These impacts can be strongly influenced by relationships and engagement. To what extent people have been consulted influences whether have a positive or negative attitude towards the battery. Acceptance of new infrastructure is sometimes referred to as ‘social licence’. Social licence refers not only to permission to go ahead with a project, but the ongoing support of the community. It’s not a one-off but is about ongoing relationships. Negative community perceptions can be mitigated by including everyone affected, including those who are ambivalent or unconcerned about the battery, and by including them early on in the project.
Community members as participants
Depending what model you finally select, community members may interact with the battery in more or less active ways. For example, they may subscribe to the battery or may sign up to make use of a particular tariff associated with battery. This participation will involve a commercial interaction, e.g. through a retailer.
But remember that these community members are more than consumers; their participation may also be about a personal connection with the battery as a piece of community infrastructure. People will be influenced by the impacts of battery participation on their energy bill, but will also be influenced by their relationship to the project and the quality of engagement (seen in the Alkimos Beach trial).
Other participation options include responding to surveys, contributing to forums or workshops, or joining a community reference group. A community reference group can provide a voice for the community in decision-making about the battery design and implementation (as implemented by YEF).
It is also important to consider that participation can involve energy customers, including those who have solar panels and those who haven’t, but also energy consumers, such as those who live in rental accommodation or social housing or who make use of local facilities e.g. shopping centres. Designing models that take into account how benefits can be shared across the community could reverse some of the inequities that have been associated with renewable energy. As above, involving some of these energy users in the design of the battery can ensure that it meets their needs.
Indigenous community members
It’s important to remember that all neighbourhood batteries will be installed on Aboriginal land, so engaging with local indigenous community members and groups, and respecting indigenous sovereignty, stewardship and needs is an important part of engagement and relationship building. In particular, as part of considering how neighbourhood batteries can reverse inequity in energy access, we should consider how this technology could increase access to renewable energy for First Nations communities and community members. The First Nations Clean Energy Network has recently released a set of Best Practice Principles and Negotiation Guide to give guidance on engaging and sharing benefits with indigenous people in renewable energy projects.
Managing community expectations
There is a lot of enthusiasm for neighbourhood batteries, but you might be concerned that early engagement would raise expectations that you can’t meet. This is particularly a risk in the feasibility phase, when there is uncertainty about whether a battery will go in at all. Expectations can be managed by giving people clear information about project stage and status. Also, just because a project isn’t going ahead, it doesn’t mean that people’s values, like decarbonisation, local climate action, and social equity, are not still being achieved elsewhere. People may still be just as excited about a neighbourhood battery installation in the next suburb, or about an alternative that you may find is a better means of achieving the community’s goals.
To learn more, read Community engagement.